SEC investigating Guggenheim Partners ties to Michael Milken

The U.S. Securities and Exchange Commission is looking into the relationship between former junk bonds trader Michael Milken and Guggenheim Partners, according to Fortune magazine.

The commission is investigating whether Milken, who agreed to a lifetime ban from the securities industry after serving time in prison for fraud, is violating terms of that ban by effectively acting as a manager of Guggenheim investments beyond his own, Fortune reported, citing sources familiar with the SEC probe.

Under terms of his settlement with the SEC, Milken is allowed to manage his own money but is banned from acting as an investment adviser or broker. He is chariman of Milken Institute.

Fortune said the SEC is investigating a number of transactions between Milken and Chicago- and New York-based Guggenheim, including a joint investment in energy company Milagro which helped the firm buy Petrohawk Energy's Gulf Coast operations for $825 million in 2007.

The report said Milken has been a longtime client of Guggenheim and at times has had as much as $800 million invested in the firm, some of it in a hedge fund run by its president, Todd Boehly.

Guggenheim Partners issued a statement confirming that it did receive an inquiry about Milken from the SEC during an examination that began two years ago.

"As Guggenheim has stated publicly, Mr. Milken, while a valued client, does not have an ownership or managerial role in the firm in any way, shape, or form," the firm said in the statemeent. Guggenheim said it is fully cooperating with the SEC.